Economic cost of global warming

The inter-governmental panel on climate change brought out once again the alarming consequences of global warming, reports DH Pai Panandiker.

indiaUpdated: Feb 09, 2007 19:32 IST

DH Pai Panandiker None

The inter-governmental panel on climate change which released the first volume of its report on February 2 in Paris brought out once again the alarming consequences of global warming. The object obviously is to provoke countries into action before it is too late.

Global warming has already begun. In the second half of the 20th century the increase in temperature was twice as high as in the century as a whole. In the Northern Hemisphere temperatures were the highest in the past 1300 years. The biggest polluters presently are the United States, China and Western Europe.

The extent of damage to the ecosystem will increase with every degree increase in the temperature. The 0.7 degree increase in warming so far has resulted in frequent extreme weather conditions, floods and droughts and, to some extent, migration of plant and animal species.

In 2005 the loss due to natural calamities was $220 billion (Rs 990,000 crore). Over the next half century temperature will step up further by two degrees with more extensive damage to the environment. Crop yields will drop, tropical diseases will flourish, water stress will intensify, loss of artic ice will follow and sea levels will rise. These consequences will intensify as temperatures rise further.

It is evident that the danger and damage from global warming are real and that these have been brought about by human activity. The main cause is the emission of carbon dioxide and other greenhouse gases. The damage global warming will inflict will depend on the magnitude and speed of change.

If no action is taken temperatures will rise by 6.4 degrees by 2100; with the use of cleaner energy the increase in temperature will be limited to 1.1 degrees. That will make all the difference to the environmental damage that will follow.

What is important, damage control is possible only if the countries initiate positive action in the next 10 to 15 years. A delay in the use of cleaner energy will make the damage inevitable. The loss in world income in that case would be about $20 trillion per year or nearly 6 to 8 per cent of the world GDP, as estimated by the German Institute of Economic Research.

This loss can be reduced to $8 trillion with the use of cleaner energy. That would cost the countries nearly $3 trillion a year. Even so, the investment in environment preservation would be worthwhile since it would yield a financial return of more than 400 per cent. But this investment is unlikely to be made voluntarily.

Initially, with the increase in temperature there may be some benefit to countries in the Northern Hemisphere particularly US, Russia, Japan and China. Countries in the Southern Hemisphere, mostly the developing countries, will be hit almost from the start.

India is likely to be the largest loser with the drop in GDP growth being more than twice that of world average. But it is mainly action by countries like the US that can slow down global warming. That, for the present, appears unlikely.